Join 3,432 readers in helping fund MetaFilter (Hide)


A Big Boy Did It And Ran Away
June 28, 2012 4:24 PM   Subscribe

Last year the CEO of Barclays Bank, Bob Diamond, told MPs that “There was a period of remorse and apology for banks. I think that period needs to be over.” Yesterday, Barclays was fined £290M by UK and US regulators for manipulating the key LIBOR lending rate.

PM David Cameron says that responsibility "goes all the way to the top of the organisation", while Diamond himself claims the lending rates scandal is "limited to a small number of people". Political figures such as Labour leader Ed Milliband and London Mayor Boris Johnson are calling for criminal investigations and even the Cityphile Financial Times agrees that it is "absurd that in the UK almost no bankers have been prosecuted for their role in the crisis and its fallout."

As an added bonus, Barclays is currently locked in negotiations with the City regulator about signing up to an industry-wide admission that British banks mis-sold complex derivatives products to thousands of small business customers.
posted by Jakey (129 comments total) 24 users marked this as a favorite

 
I kind of love the naivete behind the LIBOR setup. One part of the company for all intents and purposes sets the thing, another part makes bets on it, and up until recently we trusted them to not talk to each other. And you're telling me they couldn't resist abusing this setup? I'm shocked!
posted by BungaDunga at 4:35 PM on June 28, 2012 [7 favorites]


Last year the CEO of Barclays Bank, Bob Diamond, told MPs that “There was a period of remorse and apology for banks. I think that period needs to be over.”

To which my reply was to ask if anyone has been hung by the neck until dead yet, because after that point I think we can maybe talk forgiveness. Until then...
posted by Artw at 4:50 PM on June 28, 2012 [22 favorites]


That will put a chill on things.
posted by Ice Cream Socialist at 4:53 PM on June 28, 2012 [2 favorites]


Yeah, when banksters start serving life terms for the very real human wreckage they've created all over the globe - then maybe we can talk about the period of remorse being over and discuss forgiveness.

There are people who lost everything they have or own - their homes, their lives, their families, their relationships, and even their mortal lives - due to the criminal acts of organized thievery that these so-called financial leaders have accomplished and gotten away with with barely a slap on the wrist.

The unadulterated, unapologetic hubris of these jerks is nauseating.
posted by loquacious at 5:04 PM on June 28, 2012 [58 favorites]


I have nothing useful to say but that I'm growingly bewildered about all the things going on. It seems like what would have once (a few years ago) been a huge scandal, is now only another story among so many: Leveson, the economy, the euro, medical strikes, now the Channel Islands, welfare reforms,... Can we not just put this one story back in its box for a couple of months until we can give it the time it deserves? Heck, there might not even be a working Libor in a few months...
posted by Jehan at 5:05 PM on June 28, 2012


CEO of Barclays Bank, Bob Diamond,

It's rather convenient that the combonation of his job title and name already sounds like a comic book American banker super villain. Gives you a lot of insight on how the story is going to play out.
posted by MCMikeNamara at 5:06 PM on June 28, 2012 [2 favorites]


On the plus side Rupert Murdoch is taking his ball and going home*.

* By which I mean focusing more on fucking around with America. Sorry, America.
posted by Artw at 5:07 PM on June 28, 2012 [1 favorite]


Until we start executions, these fuckers will just keep acting with utter impunity and sneering disregard for anything other than their own pockets.
posted by Thorzdad at 5:09 PM on June 28, 2012 [3 favorites]


Has there ever existed a thinner-skinned, whinier, crybaby humanoid species than bankers? I mean, it's embarrassing to see these self-styled masters of the universe grovel like a neurotic Pekinese whenever they hear a harsh word. Bob Diamond, Jamie Dimond -- they all look alike.
posted by JackFlash at 5:09 PM on June 28, 2012 [10 favorites]


MP's call for a Leveson style inquiry into banking

I can see both the Tories and Labour tearing themselves to pieces if there is a proper light shone on the dodgy deals and 'light touch regulation' of the last twenty years.
posted by brilliantmistake at 5:16 PM on June 28, 2012 [2 favorites]


I don't really see that happening. Bit axed that Levenson happened with the present shower of shits.
posted by Artw at 6:05 PM on June 28, 2012 [1 favorite]


Nothing will change until bankers start going to jail in significant numbers. Nothing. There are no fines big enough to punish people who have hoses running directly from the world''s economy into their own bloated stomachs.
posted by 1adam12 at 6:11 PM on June 28, 2012 [16 favorites]


Not enough. Barclay's is still doing business.
posted by eriko at 6:24 PM on June 28, 2012 [3 favorites]


All these calls for long jail terms and capital punishment.. these punishments have the bar set too high for prosecution. It is not going to happen, and even when it does (Madoff, Stanford), it won't deter the large majority of smaller financial crimes that lead to the big one that hits the society without much prior warning to the general populace.

What I would like to see are shorter jail terms for more banksters - say 6 months and being ineligible for any public sector job and social security and healthcare benefits for life, and thereafter, reporting to the local police station every six months to self-certify that they have not been engaging in any criminal activity. My inspiration is this interview, linked in this FPP.
posted by vidur at 6:47 PM on June 28, 2012 [1 favorite]


I feel that, like a nation which has wreaked havoc on another country, the appropriate punishment for banks, and the only one which will dissuade them is, prosecutions of individuals, yes... but also ongoing reparations to the economies they hurt. This is a large fine, but levied once... it's like a speeding ticket. Takes a bit off the monthly budget, but it doesn't slow you down for more than a few weeks.

Why not levy a significant percentage of their gross profits, to be earmarked for large government projects which will create jobs, for a number of years befitting the amount of harm they caused.
posted by gilrain at 7:01 PM on June 28, 2012 [2 favorites]


$290million? Out of total assets totaling over $2trillion?

That's not even one percent.

Seriously, if fines are going to be any kind of a threat to hold over financial institutions, they're going to have to be something larger than a rounding error.
posted by hippybear at 7:04 PM on June 28, 2012 [22 favorites]


But, but... job creators! Producers! Protesters are dirty smelly hippies!
posted by jhandey at 7:14 PM on June 28, 2012 [1 favorite]


Yeah, I pay 13% tax on a can of soup. These guys steal container loads of soup from sick orphans, get caught and then just have to flick a few cans to the cops and then go romping off in their Bentleys to Palm Springs free to their next heist. WAT
posted by seanmpuckett at 7:20 PM on June 28, 2012 [3 favorites]


That's not even one percent. Seriously, if fines are going to be any kind of a threat to hold over financial institutions, they're going to have to be something larger than a rounding error.

To be fair though, they're such whiny babies that it probably feels to them like they're being hit with a much more colossal nearly-half-of-a-percent.
posted by -harlequin- at 7:22 PM on June 28, 2012 [1 favorite]


I'm growingly bewildered about all the things going on. It seems like what would have once (a few years ago) been a huge scandal, is now only another story among so many: Leveson, the economy, the euro, medical strikes, now the Channel Islands, welfare reforms,...

You'd almost think from all that bad news that there was a Tory government or something.
posted by srboisvert at 7:24 PM on June 28, 2012 [7 favorites]


$290million? Out of total assets totaling over $2trillion?

First off, it's £290 Million, not $290 Million. Second, they have over 2 trillion in assets, but they also have liabilities, or the equity of the bank wouldn't be £55.6 billion.

The fine is more than half a percent of the company's equity and is more than 7% of their profit last year.

If I got hit with a four thousand dollar fine for something (a rough correlation with my income) I'd be pretty chagrined.
posted by ThisIsNotMe at 7:41 PM on June 28, 2012 [1 favorite]


More than half a percent is still a rounding error.

Hell, anything under 10% can still be seen as a misplaced decimal point.

Seriously, fines need to be BIG if they're going to matter.

In comparison, having a DUI costs something around or over $10,000. And that's if you get pulled over without having caused any damage to anyone or any property.
posted by hippybear at 7:51 PM on June 28, 2012 [3 favorites]


If I got hit with a four thousand dollar fine for something (a rough correlation with my income) I'd be pretty chagrined.

Does it have to be noted once again that these things don't really scale?
posted by adamdschneider at 7:51 PM on June 28, 2012 [2 favorites]


If I got hit with a four thousand dollar fine for something (a rough correlation with my income) I'd be pretty chagrined.

Even if it was grand larceny? Or breaking & entering?

Because the crime here is ultra-mega-super-extreme-double-grand larceny. I'd think those guilty ought not to be chagrinned so much as humiliated.
posted by Devils Rancher at 8:03 PM on June 28, 2012 [4 favorites]


Yeah, that's the trick. If you got fined $4000 for stealing $8000, you'd be laughing.
posted by gilrain at 8:04 PM on June 28, 2012 [5 favorites]


They are.
posted by benzenedream at 8:18 PM on June 28, 2012 [1 favorite]


All the way to... Well, it's not far.
posted by Artw at 8:23 PM on June 28, 2012 [7 favorites]


Last year the CEO of Barclays Bank, Bob Diamond, told MPs that “There was a period of remorse and apology for banks. I think that period needs to be over.”

Wow. When I saw this part on the front page, I thought he meant that in the sense, you know, that banks should stop making empty apologies and take responsibility, should stop being bailed out, should being held accountable. I'm a little dismayed at my own naiveté.
posted by cairdeas at 8:33 PM on June 28, 2012 [5 favorites]


It's rather convenient that the combonation of his job title and name already sounds like a comic book American banker super villain. Gives you a lot of insight on how the story is going to play out.

BarCap's head is a guy by the name Rich Ricci. Just sayin'.
posted by the cydonian at 8:38 PM on June 28, 2012 [1 favorite]


Ugh. I don't know a lot about finance. I'm not great with money, as I surely don't have much.

And I have a LOT of student loans.

And I see a LOT of stories and editorials talking about how stupid people are for taking out so much debt in student loans, and that everything is your fault and that you are responsible for your actions.

And I agreed and was fine with that.

I kept quiet. I knew that I was going to be taking out a lot of money, and that it would take a long time to pay it off, and that I was going into a field where it was going to be a bit risky. However, I read the documents, and I signed the forms, and I thought I knew the rules and knew what I was getting into.

And you know what? It was all rigged! The game was rigged!

First, the student loan department in the school I went to gets hit with a scandal right after I leave. I find out that the very department that had provided the guidance and helped me pick these loans had a financial interest in the loans they were promoting. I was picking cards from a deck that was stacked against me from the start!

And now, it looks like LIBOR, the very rate to which my loans are pegged, may also have been rigged? Hell, I barely understood or understand what LIBOR is, but I just assumed it was a given and that it was something I could just take as an assumption that was fair. I scrutinized the various loan offerings and how far over LIBOR they were, and how the rates changed over the life of the loan. But I never really looked at LIBOR itself that closely. Hell, after reading the story and looking at LIBOR rates, I think any manipulation of the rates probably helped REDUCE the amount of interest I was paying. Nevertheless, these weren't the terms I thought I was signing up for.

Oh, and on top of all that, the one woman and agency that I thought might help keep an eye on these sorts of things and was put in place right as I walked out with my degree--Elizabeth Warren and the CFPB--gets eviscerated before I even got the diploma in a frame.

I feel like I need to get a calculator out and triple-check the math on all the forms I signed and the amounts on every individual bill i have paid thus far.

When talking about Barclays, David Cameron said that "People have to take responsibility for the actions and show how they're going to be accountable for these actions." That is exactly what the chorus told me as I signed all those promissory notes. I haven't missed a payment yet.

I thought I have been responsible in the way I have acted. And now it turns out that the script was being revised while I was on stage.
posted by This_Will_Be_Good at 8:46 PM on June 28, 2012 [18 favorites]


That will put a chill on things.
posted by Ice Cream Socialist at 7:53 PM on June 28


Delightful.
posted by evidenceofabsence at 8:59 PM on June 28, 2012 [2 favorites]


So when do get off our assess and take to the streets? We all know what and who the problem is. When are we going to stand up and slice off the relentlessly thieving hands?
posted by clockzero at 9:03 PM on June 28, 2012


So when do get off our assess and take to the streets?

September of last year.

That is, it would have been if people weren't too busy pooh-poohing the people who did get off their asses and took to the streets.
posted by EmpressCallipygos at 9:06 PM on June 28, 2012 [17 favorites]


I'm entirely sympathetic to the ideology and practices of OWS, but I must observe that it has not achieved some things and probably won't. I was talking about direct violent action. Structural violence immiserates billions, ruins the lives of millions here in the US. Is this the middle ages? Do we sit in quiet desperation, crushed under our medical bills, student loans, and debt, looking in vain for decent jobs and good pay, merely surviving or not that even, until the people in charge deign to throw us a bone from the feast they make of the world economy? We will wait forever.
posted by clockzero at 9:19 PM on June 28, 2012 [1 favorite]


Funny all the calls for violence in this thread. Will there be trials or just hacking away at people wearing suits near financial districts?

I wonder: what kind of rhetoric inspires a critical mass to set aside time to look up how their elected officials stand on financial regulation, to press their local media for more reporting on the ties between private and public sector players, to donate to lobbyists for reform – or perhaps, candidates for same?
posted by noway at 9:37 PM on June 28, 2012 [4 favorites]


Hey, remember last August there were riots and figures in the media started to openly circulate analysis of that old timey white supremacist Enoch Powell? And some teenagers got jail time for stealing bottled water and all the law and order types were all glad because those kids, they needed to be made an example of, for treating the law with such impunity. It'd be nice to hear from those quarters an ounce of that same outrage and condemnation for these miscreants and robber barons.

When?
Hopefully sooner rather than later. Or it might be rivers of blood for realsies.
posted by dustyasymptotes at 9:45 PM on June 28, 2012 [3 favorites]


Yeah, I pay 13% tax on a can of soup. These guys steal container loads of soup from sick orphans,

I've used this analogy before, but it's like comparing you stealing that can of soup from a 7-11, to the bankers stealing 7-11. All of it. The entire chain. Yet, somehow, you're a lot more likely to do jail time.

Further, they stole 7-11 and made several billion dollars, and the resulting fines are a couple hundred million. Who on earth wouldn't take that deal?

The regulatory system for banks is, perhaps, even more corrupt than the banks are.
posted by Malor at 10:00 PM on June 28, 2012 [2 favorites]


My husband used to work as a Public Defender. At some point he tried to convince a judge that his client using a stolen credit card to order a pizza was the same as stealing a loaf of bread to feed his starving family. The judge didn't buy it. Honestly, it seems more plausible than some of the stuff going on here.
posted by Mrs. Pterodactyl at 10:07 PM on June 28, 2012


Saruman: You have fought many wars and slain many men Théoden king, and made peace afterwards. Can we not take council together, as we once did, my old friend? Can we not have peace, you and I?

Théoden: We shall have peace. We shall have peace… when you answer for the burning of the westfold, and the children that lie dead there. We shall have peace, when the lives of the soldiers, whose bodies were hewn even as they lay dead against the gates of the Hornburg, are avenged! When you hang from a gibbet for the sport of your own crows… we shall have peace."
posted by George_Spiggott at 10:12 PM on June 28, 2012 [4 favorites]


So when do get off our assess and take to the streets? We all know what and who the problem is... I was talking about direct violent action.

The only people who will be willing to take direct and violent action right now are the usual suspects. It will only happen on a large scale when the majority of people feel as if they have nothing to lose, and prison or death would be better than their current day-to-day circumstances. That having an actual war in their very own neighborhoods (complete with houses getting leveled, kids getting killed, disrupted access to water, disrupted access to food, deprivation, fear, disruption of their entire lives) who be better than their current day-to-day circumstances.

Them's just the facts, IMO. I think that's the point at which most people start to go for it, and you will never convince them to do it before.
posted by cairdeas at 10:43 PM on June 28, 2012 [2 favorites]


Jail, schmail.

They should be sentenced to life in poverty. They should have to pay reparations, from their own pockets, be cut off from their own finances, and be forced to survive on minimum wage.

They should have to live like all the people they fucked over in the economy they ruined.
posted by louche mustachio at 11:59 PM on June 28, 2012 [9 favorites]


btw, one of barclay's more profitable products is tax avoidance for banks. They were recently fined £500 by HM treasury and have helped a number of european banks avoid tax in similar ways.. http://www.bbc.co.uk/news/business-17181213
posted by 3mendo at 2:38 AM on June 29, 2012


I'm entirely sympathetic to the ideology and practices of OWS, but I must observe that it has not achieved some things and probably won't.

Has it occurred to you that the reason that they haven't achieved things is precisely because you're sitting there wondering "who's gonna do something" rather than trying to help people who actually are doing something?

I was talking about direct violent action.

I see. Well, if that's what you wanted OWS to achieve, then no, they aren't going to help you there. However, I think you'll have a hard time finding people who think they should, or that that would help matters. Also, angry mobs tend to cause their own bigger problems, so I'm a bit concerned that you're waiting for that rather than joining in with a more peaceful movement.
posted by EmpressCallipygos at 3:59 AM on June 29, 2012 [2 favorites]


When talking about Barclays, David Cameron said that "People have to take responsibility for the actions and show how they're going to be accountable for these actions." That is exactly what the chorus told me as I signed all those promissory notes. I haven't missed a payment yet.

This whole "responsibility" argument from the moneyed class is another crock of shit. Corporations walk away from bad deals all the time. Goose and gander.
posted by Benny Andajetz at 5:07 AM on June 29, 2012


Re: Bob Diamond from the Economist's Buttonwood blog:

One might reasonably conclude that the senior management of a bank cannot possibly know what is going on at the level of the individual traders; banks are just too complex. Fair enough. But one cannot have it both ways. If bank executives cannot be held responsible for all the shenanigans that go on underneath them, nor can they be responsible for all the profits that result.
posted by Esteemed Offendi at 5:59 AM on June 29, 2012 [4 favorites]


If reformers were really terribly clever, far more clever than they actually are, they would try to get the bankers on their side, and realize everyone is a victim of the system in their own way. Demonization is, ultimately, satisfying like eating a whole tray of nachos by yourself, and just as unwise.
posted by shivohum at 6:58 AM on June 29, 2012


I resently was pinged by an unexpected overdraft fee, which left me drinking veg stock for a couple of days. I still don't believe in a "monster banker", though.
It seems to me that whatever their position, they only get to see what they're directly responsible for.

As though they're all a cog in a set of gears, only vaguely aware of what their action imparts on the rest of the banking system.

Banks are monsters, not bankers? I guess.
posted by Packed Lunch at 7:08 AM on June 29, 2012


If reformers were really terribly clever, far more clever than they actually are, they would try to get the bankers on their side, and realize everyone is a victim of the system in their own way. Demonization is, ultimately, satisfying like eating a whole tray of nachos by yourself, and just as unwise.

Oh yeah, the system is really victimizing BANKERS. What idiots we are for not talking about how unfair million-dollar bonuses for absolutely destroying the world economy for a DECADE are!
Explain to me in what way a class of extremely wealthy, post-national, completely unaccountable bandits are being victimized by the system THEY THEMSELVES ARE VICTIMIZING.
posted by 235w103 at 7:27 AM on June 29, 2012 [3 favorites]


Banks are monsters, not bankers? I guess.

Damn it, I just finished reading Eichmann in Jerusalem. Banks are monsters because they make it possible for people to become monsters without realizing it. There are definitely banker monsters literally responsible for deaths for the purpose of just getting more money, and I'm 100% sure that these monsters are perfectly nice people who wouldn't hurt anyone they knew and donates to charity. They are monsters precisely because they are cogs. They are the worst monsters I can think of. I guess that does make them victims, because no one wants to be a monster, they had their humanity stolen from them by the banks they work for and turned into monsters.
posted by fuq at 7:38 AM on June 29, 2012


> If reformers were really terribly clever, far more clever than they actually are, they would try to get the bankers on their side, and realize everyone is a victim of the system in their own way.

> I guess that does make them victims, because no one wants to be a monster, they had their humanity stolen from them by the banks they work for and turned into monsters.

What is wrong with you people? If these bankers were throwing puppies off a bridge, you'd be calling for their blood. Well, I love puppies as much or more than the next guy, but what these bankers are consciously doing is a lot worse than that - they're victimizing literally millions of people, and a lot of them sufficiently badly that they lose everything, and some of them enough that they die as a result.

These bankers are criminals, not victims. They deserve less sympathy than, say, pederasts, because at least child rapists can claim that they are in the grip of a mental illness, and many of them feel great guilt for their awful crimes, whereas bankers are simply greedy and dishonest and feel great superiority over the rest of the world because of their success in crime.
posted by lupus_yonderboy at 7:47 AM on June 29, 2012 [7 favorites]


Back in September 2008 the LRB ran a piece on LIBOR, What's in a Number?, which I remember reading when it first came out. It's the best explanation I've read of why LIBOR is so important. But even the well-informed author of that piece, Donald MacKenzie, didn't have a clue as to what was really going on:

The obvious risk to the integrity of the calculation is that a bank on a Libor panel might make a manipulative input, trying to move Libor up or down so as to influence interest rates or the value of its swaps portfolio.

Quite so. But MacKenzie was confident that this couldn't possibly happen. After all, no bank would take the massive risk of trying to rig the figures in full view of the markets:

The brokers see and hear a lot. An input wildly at odds with what their screens show would be obvious, and word of persistent attempts at manipulation would quickly spread as brokers chat with their clients. The ultimate sanction – used in the past, I was told, but not recently – is a bank’s removal from a Libor panel. In the current climate, that would deeply damage the bank’s reputation.

Damage to a bank's reputation, eh? That could be serious. Lucky it couldn't happen.

If I'd read a novel about City life in which bank traders routinely broke the law and then sent each other congratulatory e-mails saying, "Dude, I owe you big time! Come over one day after work and I'm opening a bottle of Bollinger", I'd have dismissed it as a crude and painfully obvious caricature. Once again, reality leaves satire trailing in the dust.
posted by verstegan at 7:57 AM on June 29, 2012 [3 favorites]


Banks should now be allowed to lead Britain's economic growth, taking up the slack left by cuts in public spending, he said.

A true humanitarian, this guy.
posted by Rykey at 7:58 AM on June 29, 2012


What idiots we are for not talking about how unfair million-dollar bonuses for absolutely destroying the world economy for a DECADE are!

First of all, not all bankers are criminals any more than all black people are criminals. To lump a whole profession in with its worst elements is preposterous and is unfortunately symptomatic of the shallow discourse we have these days.

Portraying bankers as cheap cartoon villains takes the heat off tons of other irresponsible elements that caused the economic disaster: legislatures which wanted to provide cheap housing and credit, central banks which provided an unlimited supply of cheap money, the stupid people who manage pension funds and ratings agencies, and, yes, millions of individuals who spent far beyond their means.

Second, and more importantly, bankers are ensconced in a system that has certain incentives. They respond to those incentives because if they didn't, they wouldn't survive. Change the incentives and you'd change the behavior... but you can only change the incentives by changing the system as a whole.
posted by shivohum at 8:23 AM on June 29, 2012


not all bankers are criminals any more than all black people are criminals.

REALLY not helping there.
posted by Artw at 8:33 AM on June 29, 2012 [5 favorites]


Portraying bankers as cheap cartoon villains takes the heat off tons of other irresponsible elements that caused the economic disaster: legislatures which wanted to provide cheap housing and credit,

Lobbied for by bankers.

central banks which provided an unlimited supply of cheap money,

Run by bankers.

the stupid people who manage pension funds and ratings agencies,

Lied to by bankers.

and, yes, millions of individuals who spent far beyond their means.

Ditto.
posted by ChurchHatesTucker at 8:40 AM on June 29, 2012 [8 favorites]


Second, and more importantly, bankers are ensconced in a system that has certain incentives. They respond to those incentives because if they didn't, they wouldn't survive. Change the incentives and you'd change the behavior... but you can only change the incentives by changing the system as a whole.

I agree, let's replace capitalism.
posted by cdward at 8:44 AM on June 29, 2012


Lobbied for by bankers.

No need to lobby for it when it's an extremely popular policy among the common folk. People love cheap money. Everyone does. It's a political winner.

Run by bankers.

Bankers responding to political directives to ensure a flow of unlimited cheap money.

Lied to by bankers.

Lied to by their own greed and laziness.

Ditto.

Ditto.
---
I agree, let's replace capitalism.

Good idea. That worked so well the last several times it was tried.
posted by shivohum at 8:51 AM on June 29, 2012 [1 favorite]


Lied to by their own greed and laziness.

That's a most curious defense.
posted by ChurchHatesTucker at 8:53 AM on June 29, 2012 [1 favorite]


Oh wait. You weren't talking about bankers' greed and laziness.

So, you approve a mortgage you know is too much for the applicant to maintain, so you can bundle it into a security you swear is perfectly sound and sell it, and it's everyone else's greed that's the problem?
posted by ChurchHatesTucker at 8:58 AM on June 29, 2012 [6 favorites]


You should also understand that there was a huge change in the social contract about 20 years ago - but no one thought to tell "the consumer".

After the crash of 1929, the financial and banking system was completely overhauled. All sorts of shenanigans were eliminated, with severe penalties for not just deliberate fraud, but simply neglecting ones' responsibilities.

And the result was two generations of bankers who were extremely conservative - think "Mr. Mooney" in "The Lucy Show".

If you were a "regular guy" and you wanted to get a mortgage, you walked into your banker's office, he'd look at what you earned, what you spent, what you owed, and then told you how much of a mortgage he would give you. This was generally a conservative number - bankers quite rightfully wanted to only give out mortgages that they felt would have a very low chance of defaulting.

And then, starting with Reagan, everything went to shit. Reagan and his cronies deregulated the banking industry, leading almost immediately to the Savings and Loan Crisis. I worked on securitizing mortgage debt for Drexel Burnham Lambert during that period, and it was blatantly obvious to everyone that many of these bankers were simply looting their banks.

Reagan and later Bush and Clinton made it very clear that no banker was going to go to jail unless they actually stole money. No amount of lying, paying themselves huge bonuses, and then getting out as their institution collapsed was ever going to be punished by criminal charges, even though these actions were specifically felonies under the Securities Act of 1934.

It took a while for this knowledge to percolate, but when it did, there was a revolution all over the industry.

In particular, now when a "regular guy" went in to get a mortgage, the bankers now gave them mortgages that were way out of their ability to pay - often simply lying to them if all else failed - because they were securitizing those mortgages, they didn't care if they went bust, and they were no longer in fear of the Federal bank examiners.

The "regular guys" accepted these bad mortgages, in the same way that most people simply accept a prescription given to them by a doctor - because they had every reason to believe, due to generations of experience, that their banker was a government-licensed and regulated professional who would behave in a responsible manner, and who would have no incentive to give them a mortgage that they couldn't complete.

Yes, there were a tiny number of people who got bad mortgages and knew what they were doing, but for the most part, the mortgage victims of the global financial crisis are about as much to blame as a mother who took thalidomide on her doctor's prescription and had a child with birth defects.
posted by lupus_yonderboy at 9:24 AM on June 29, 2012 [26 favorites]


Portraying bankers as cheap cartoon villains

I think the term "bankers" here is used to represent the executive team and board members of banks.

Not necessarily the friendly tellers, or cleaning ladies, or even that weird guy who lives down the street and just happens to do some part time IT work for Goliath National Bank. These people aren't the ones directing the series of cogs, nor do they receive seven figure bonuses.

They're not entirely blameless, but placing their severed heads on sticks probably won't achieve the same effect as what seems to be necessary at this point.
posted by Blue_Villain at 9:49 AM on June 29, 2012 [2 favorites]


Guys should go to jail for this, the way LIBOR is reported should be reformed, Barclays should pay a bigger fine.

that said - you all do realize that they were systemically underreporting LIBOR - i.e. stealing from the lenders and giving it to the borrowers.
posted by JPD at 10:14 AM on June 29, 2012 [2 favorites]


....and the other shoe drops - FSA finds banks guilty of mis-selling to small firms.

The FSA...did not say how much money would be necessary to compensate the businesses involved.

Sandy Chen, from Cenkos Securities, estimated that the total cost to the banks collectively would be between £1.1bn to £1.4bn, with most of that falling on Barclays.


Significantly, there is no mention in the FSA's own press release about any punitive action taken against the banks. As has been the case with MPs expenses and high-net-worth taxdodgers, getting caught with your hand in the till only requires that you forgo your ill-gotten gains. When benefit fraudsters and shoplifters are similarly caught, they don't just get to hand back their takings and walk away. We are told constantly that these Pavlovian bankers respond slavishly to incentives - maybe it's worth trying a touch of the stick as well as the carrot.
posted by Jakey at 10:18 AM on June 29, 2012 [1 favorite]


The only people who will be willing to take direct and violent action right now are the usual suspects. It will only happen on a large scale when the majority of people feel as if they have nothing to lose, and prison or death would be better than their current day-to-day circumstances. That having an actual war in their very own neighborhoods (complete with houses getting leveled, kids getting killed, disrupted access to water, disrupted access to food, deprivation, fear, disruption of their entire lives) who be better than their current day-to-day circumstances.

Them's just the facts, IMO. I think that's the point at which most people start to go for it, and you will never convince them to do it before.


I think cairdeas is right, which is tragic, because it means millions will suffer unnecessarily before they're angry enough to do something about it.

Has it occurred to you that the reason that they haven't achieved things is precisely because you're sitting there wondering "who's gonna do something" rather than trying to help people who actually are doing something?

It has; in fact, I've made the same point to other people here and elsewhere. But the problem is that while OWS is great at raising awareness and building solidarity, it's not doing anything to strike directly at the heart of the issue. I realize that calls for violence are crude and antisocial. I'm just frustrated with the impunity of the powerful.
posted by clockzero at 10:23 AM on June 29, 2012


JPD: ... you all do realize that they were systemically underreporting LIBOR - i.e. stealing from the lenders and giving it to the borrowers.

Wrong. The following are quotes are from the U.S. Commodity Futures Trading Commission report on the price fixing.

"One trader stated in an email to a submitter: “We have another big fixing tom[orrow] and with the market move I was hoping we could set [certain] Libors as high as possible."

"Senior managers even coined the phrase “head above the parapet” to describe high LIBOR submissions relative to other banks. Barclays’ LIBOR submitters were told not to submit at levels where Barclays was “sticking its head above the parapet.” The directive was intended to fend off negative public perceptions about Barclays’ financial condition arising from its high LIBOR submissions relative to the submissions of other panel banks, which Barclays believed were too low given the market conditions."

In other words, as suspicion began to focus on Barclays's, senior managers instructed their submitters to put in higher rates but not so high as to attract attention.

Higher LIBOR rates artificially inflated such things as adjustable rate mortgages and student loans. It was pure theft from the most vulnerable.
posted by JackFlash at 10:28 AM on June 29, 2012


In other words, as suspicion began to focus on Barclays's, senior managers instructed their submitters to put in higher rates but not so high as to attract attention.

Uhm it actually means the opposite of that - read it again.
posted by JPD at 10:34 AM on June 29, 2012


Barclays didn't want to disclose the full price that they were being forced to borrow at because they felt it would show a degree of financial distress they didn't want to reveal to the other desks. By not bidding their actual costs they were holding LIBOR down.
posted by JPD at 10:37 AM on June 29, 2012 [1 favorite]


You're right. My misreading.
posted by JackFlash at 10:47 AM on June 29, 2012


This really is a big deal. While there has always been greed, over the past 15 years we've seen greed that literally has no bounds. They don't care if they destroy the entire system, as long as they get rich individually. In the old days, the common man was still getting shit on, but the people at the top at least cared enough to uphold the basic elements of the social contract which allows them to be at the top in the first place.
posted by cell divide at 11:11 AM on June 29, 2012 [1 favorite]


A Huge Break in the LIBOR Banking Investigation [originally posted by Homunculus]
posted by Joe in Australia at 11:38 AM on June 29, 2012


I suspect that manipulating the LIBOR rate can make some money for a bank directly (because it gets to charge more for adjustable-rate mortgages) but the really, really big money lies in manipulating the value of securities. I wonder how much of this would be revealed by a good statistical analysis?
posted by Joe in Australia at 11:53 AM on June 29, 2012 [1 favorite]


More Taibbi: Another Domino Falls in the LIBOR Banking Scam
posted by homunculus at 12:03 PM on June 29, 2012 [2 favorites]


They weren't consistently overstating or consistently understanding the price; which one they did on each given day depended on which one would be beneficial to them on that specific day.

The Dealbreaker analysis from Wednesday is quite interesting.
posted by Perplexity at 12:20 PM on June 29, 2012 [1 favorite]


the price of prosperity
posted by fightorflight at 1:51 PM on June 29, 2012


I was talking about direct violent action. Structural violence immiserates billions, ruins the lives of millions here in the US. Is this the middle ages? Do we sit in quiet desperation, crushed under our medical bills, student loans, and debt, looking in vain for decent jobs and good pay, merely surviving or not that even, until the people in charge deign to throw us a bone from the feast they make of the world economy? We will wait forever.

The purpose of democracy is to give the people an avenue for change without resorting to violence and the many terrible problems it brings itself. That's what our country is actually about, not flag-waving, family values or Da Bibble. You should VOTE. You should get your friends to VOTE. You should get your friends to get your friends to VOTE. Repeat that about six more times.

We don't yet have direct purchasing of votes, although powerful forces are trying to push us there. But those forces only get their power because we let them. All of us, we should VOTE! And once we vote, we should keep voting.
posted by JHarris at 4:29 PM on June 29, 2012 [3 favorites]


All sorts of shenanigans were eliminated, with severe penalties for not just deliberate fraud, but simply neglecting ones' responsibilities.

In the article I linked to above, William Cohan argues (persuasively to my mind) was that regulation wasn't the main issue - it was that investment banks used to be partnerships, where partners had their own money on the line. When they became public companies, that was no longer true, so the incentives to take risks skyrocketed.

because they were securitizing those mortgages, they didn't care if they went bust, and they were no longer in fear of the Federal bank examiners.

The question was: who was buying these shitty mortgages and why? There's no securitization unless there are stupid buyers who should know better. Fannie and Freddie, billion-dollar pension funds, bought-off ratings agencies: huge numbers of institutions had to participate to make that work.

The "regular guys" accepted these bad mortgages, in the same way that most people simply accept a prescription given to them by a doctor

This is taking a rather saintly and patronizing view of the regular guy. The regular guy thought that housing would always go up. The regular guy liked buying things with home equity loans. The regular guy liked being able to get easy loans to buy larger houses than he should, and did not look too much into the details. He heard only what he wanted to hear.

This is really just like the student loan fiasco. Most people really have no business taking out $100,000 in loans to finance a sociology degree. A moment's independent thought would reveal this. But they do it. Why? Because their government tells them they should? No! It's largely because of a refusal to look easy money in the mouth. And why does tuition go up every year? Because it can. Because the government increases the loan amounts.

There are here, government played a pivotal role in causing these problems by setting up the wrong incentives, sponsoring excessive debt and looking the other way because people liked the waterfall of credit.
posted by shivohum at 4:31 PM on June 29, 2012 [1 favorite]


The purpose of democracy is to give the people an avenue for change without resorting to violence and the many terrible problems it brings itself. That's what our country is actually about, not flag-waving, family values or Da Bibble. You should VOTE. You should get your friends to VOTE. You should get your friends to get your friends to VOTE. Repeat that about six more times.

And yet, look where we are now. Voting is functionally irrelevant when both parties depend on the same financial backers, and when nobody on the national stage will even mention structural problems. The system is totally rigged.
posted by clockzero at 4:43 PM on June 29, 2012 [1 favorite]


And yet, look where we are now. Voting is functionally irrelevant when both parties depend on the same financial backers, and when nobody on the national stage will even mention structural problems. The system is totally rigged.

It is not rigged, not yet. Instead, people are apathetic, and some of them are deluded. Your statement is not a description of the problem but a symptom of it.
posted by JHarris at 11:55 PM on June 29, 2012 [5 favorites]


Forget the loans. That’s not what this is about. For a trading desk, and for the traders directly involved, LIBOR is all about the rate at which banks can borrow or lend from one another. There are untold trillions – trillions, with a T - worth of derivatives built from these rates.

Downstream, yes, your student loans or mortgage rates are marginally affected. Corporations and pension funds and governments are being ripped off. But that’s the last thing a trader thinks about. Really, they’re not thinking about you at all. They’re operating in a world of paper, not people. The real world is considered only as an input: ie, how could changes out there impact my position?

To give one example, taken from the Barclays email linked in the Taibbi article – and there are hundreds of potential trades in related markets and instruments that spring from this behaviour - the trader at Bank A is thinking “ok, I’m received $500k DV01 USD 3m LIBOR @ 540bps settling Jan 2nd from Bank B”.

For non-market types, gibberish. For traders, shorthand. This is called a swap: Bank A is swapping an incoming stream of payments at an agreed fixed rate of 5.40% for an outgoing stream of payments to Bank B at an uncertain (floating) future rate. The difference between these two rates (fixed and floating) over the next 3 months is their profit or loss. In other words, you gimme a sure 540 now and I’ll give you 540 plus or minus something in the New Year. The trade settles on Jan 2nd (over the year end ‘turn’ which is important as historically cash liquidity is scarce at this time, leading to a bias for higher rates).

Bank A knows they’re getting 540 bps on their money, what they don’t know is what they’re paying. This is much simplified, but the lower the average LIBOR rate over the next 3 months, the happier Bank A will be. If the rate averages less than 540bps, there will much rejoicing and popping of Bollinger corks at Bank A, and much wailing and gnashing of teeth at Bank B. If the rate averages greater than 540bps, the reverse.

So: In our example, if the LIBOR rate over the next 3 months averages 536.5bps (or 5.365%) as per the trader’s request, just 3.5bps or 0.035% p/a lower than the agreed fixed rate, the trader at bank A has just made $500,000 x 3.5 = $1.75m over three months. At Bank B’s expense. And, happily and not uncoincidentally, Bank A is part of the panel that sets the very rate their trader profits from. There is a reason swap desks at submitting banks are given large risk budgets. One phone call, one email, one jokey shoulder-punch at the next risk meeting and the submitter posts 5.365 from here all the way to Xmas. Happy days, outsized profits, and bank directors, just like Mafia bosses, needn’t look too deeply into the reasons why. Just gimme the money, and you’ll get yours.

Bank A is more or less equivalent to a trainer looking to fix a horse race. He can’t control all the other horses, and all the other trainers, but he can fix his own horse alright. And if his horse is the favourite (in the banking world, a dominant player) or a long-odds outsider (a minnow), then running unusually fast or slow for a given 3 month race can have a substantial impact on the odds, the outcome, and the payout. All the more so if other horses and trainers are pulled into the scam.

LIBOR is just the latest in a long line of 'surely this' scandals ... keep looking under rocks and you'll keep finding roaches. Banks have evolved in a generation from staid public servants to giant hothouses for fraudulent and criminal behaviour and a very large number of people should now be behind bars. The money involved has sucked everything around it into a gigantic black hole of amoral fuckery. In all seriousness, US prosecutors should throw the RICO racketeering statute at the banks and burn them to the ground. Nationalise what’s left and start again: the entire banking system is unfixably fucked and rotten to the core and has our politicans and political system and now all of us wrapped lovingly and helplessly in its slimy vampire squid tentacles.
posted by bookie at 6:04 AM on June 30, 2012 [12 favorites]


My reading says that the LIBOR rates were based on trimmed means: they took the 16 (or whatever) rates given by the banks; threw away the top and bottom 25% of them, and took a mean of what was left. If this is the case, how could an individual bank fix anything?
posted by Joe in Australia at 9:55 PM on June 30, 2012


It has a smaller impact for sure, but you still move one low bid into the pool used to calc the mean if you were intentionally bidding low. But I think the bigger issue is that we are almost certainly going to find out it isn't just one bank fiddling things.
posted by JPD at 5:40 AM on July 1, 2012


There are many things I feel proud about as a New Zealander.

The thing I feel humiliated by, is that we democratically elected a multi-millionaire, former head of Merill-*#@$-Lynch's Asian foreign exchange, as our Prime Minister.

The Smiling Assasin

*Sigh*
posted by Elysum at 6:16 PM on July 1, 2012


Barclays chief executive Bob Diamond has resigned with immediate effect

El Oh El
posted by fullerine at 11:40 PM on July 2, 2012


There may be more to come on this. Hell hath no fury like a banker scorned. From the Guardian

Some City experts believe that Bob Diamond's resignation is partly due to a major breakdown in relations with the Bank of England in the last couple of days.

And that could make Diamond's appearance tomorrow at the Treasury Select Committee even more explosive.

This all revolves around a phone call which apparently took place between Bob Diamond (when he was running Barclays investment banking arm) and Paul Tucker (deputy governor of the Bank of England) in late 2008 over the Libor figures which Barclays was submitting each day. We don't know what was said on the call, but it emerged over the weekend that certain unnamed Barclays insiders (and we're not going to speculate about who) had told the BBC's Robert Peston that managers somehow thought they had permission from the Bank of England to make "false submissions about their borrowing costs".


Nils Pratley, our financial editor, believes this morning's resignation gives Diamond much more leeway to reveal exactly what happened. He writes:

A chief executive of Barclays could not declare war on the Bank of England. A former chief executive can.

Note: Bob's resignation is with immediate effect and he seems to be relishing the opportunity to have his say at the Treasury Committee tomorrow. Get your tickets now.

posted by Jakey at 1:46 AM on July 3, 2012


Barclays head forced out, JPMorgan head remains
posted by homunculus at 12:31 PM on July 3, 2012


Why is Nobody Freaking Out About the LIBOR Banking Scandal?
posted by homunculus at 12:34 PM on July 3, 2012 [1 favorite]


There should be a standard that one million in fraud also equals one person-year in jail.
posted by benzenedream at 1:59 PM on July 3, 2012


Barclays Executive Bob Diamond Also Resigning From Mitt Romney Fundraiser
posted by homunculus at 3:18 PM on July 3, 2012


There's a really good point in this article:
does Miliband really want Tony Blair to explain publicly what he does as "special adviser" to JP Morgan? The former prime minister receives a reported £2.5m a year from the banking giant. Nice work if you can get it, and this is the kind of pay awaiting Cameron after he steps down.
The obvious inference is that JP Morgan (reportedly) pays Tony Blair £2.5m a year as a signalling device: this is what the present Prime Minister may expect to be paid if he and the bank are on friendly terms. There is nothing so vulgar as an explicit quid pro quo, just a friendly gesture and what it might imply.
posted by Joe in Australia at 4:46 PM on July 3, 2012 [4 favorites]


Following Barclays' Scandal, Stiglitz says 'Send Bankers to Jail': Without threat of prosecution, says Nobel economist, expect little to change
posted by homunculus at 2:03 PM on July 4, 2012 [2 favorites]


Why is Nobody Freaking Out About the LIBOR Banking Scandal?

Goddamn, we only got so many freakouts in us!
posted by Rykey at 4:24 AM on July 5, 2012 [1 favorite]


Barclays Executive Bob Diamond Also Resigning as Host of Mitt Romney Fundraiser $25,000 and $75,000 a ticket.
posted by R. Mutt at 4:29 AM on July 5, 2012


It is perhaps worth mentioning that the £290 million fine is tax deductible. It's like the laws are written by and for the rich. Oh. Right.
posted by Dodecadermaldenticles at 4:29 AM on July 5, 2012 [2 favorites]


Christ.
One Barclays trader told a trader from another bank in relation to three-month dollar Libor: "duuuude... what's up with ur guys 34.5 3m fix... tell him to get it up!"
im in ur average interest rate killin ur economy
posted by pracowity at 4:33 AM on July 5, 2012 [2 favorites]


Why is Nobody Freaking Out About the LIBOR Banking Scandal?

Meaning why is nobody in the United States freaking out about this.

I would wager that the answer is "because when it comes to matters of finance and economics the average American is thoroughly clueless".

(And I include myself in that number. I've worked as a secretary in finance for ten years and I recently confessed to my boss that "I've not understood a thing anyone around me has been talking about in all that time".)
posted by EmpressCallipygos at 6:28 AM on July 5, 2012


I can't even imagine what "duuuude" sounds like in an English accent.
posted by Rarebit Fiend at 7:45 AM on July 5, 2012


The LIBOR scandal "is about to go global". - The Economist

If you think the explanation for the Higgs Boson is geeky... (at least none of it is in Comic Sans)
posted by oneswellfoop at 9:40 AM on July 5, 2012 [1 favorite]


I can't even imagine what "duuuude" sounds like in an English accent.

It's almost as annoying as when the same people say "Ma-a-a-a-a-te!" I kind of want to slap them, but as they play rugby and do lots of dangerous sports I know I'll get my arse kicked, so I keep my mouth shut.

We've taken our entire economy and handed it to wankers. We are a future history lesson where the pupils all say "What on earth did they think they were doing? Did someone put hallucinogens in the water supply?" and the teacher replies, "I know, mad isn't it!"
posted by Grangousier at 10:30 AM on July 5, 2012 [1 favorite]


Oh, and the main reason this has blown up now is that Idiot George Osborne thought he could spin it so that the last government would take the blame and take the heat off him - it didn't just happen, it's been planted in the right papers. But Idiot George is Idiot George, and hopefully this will wind up as humiliating as Leveson.
posted by Grangousier at 10:32 AM on July 5, 2012


(And I include myself in that number. I've worked as a secretary in finance for ten years and I recently confessed to my boss that "I've not understood a thing anyone around me has been talking about in all that time".)

I think it's quite apparent to me now that most of these millions-earning captains of industry also fall into the same category.
posted by the cydonian at 7:27 PM on July 5, 2012 [1 favorite]


"The tobacco moment" is an interesting handle to give to this. Are there any more shakily balanced cards left in our global economy?
posted by infini at 6:47 AM on July 7, 2012


Why is Nobody Freaking Out About the LIBOR Banking Scandal?

Because the US standard mortgage is 30 year fixed loans based on the fed funds rate and that's all the greater US populace ever really cares about.
posted by Talez at 10:05 AM on July 7, 2012


Rolling Stone: LIBOR Banking Scandal Deepens; Barclays Releases Damning Email, Implicates British Government, Matt Taibbi

Daily Mail: 20 more banks were rigging interest rates: British bankers now facing criminal inquiry over scandal that was kept secret for years
posted by the man of twists and turns at 11:36 AM on July 7, 2012


Regulators should seek to get covert agents hired into the big banks so these sorts of things could get caught early and documented thoroughly.
posted by Anything at 12:01 PM on July 7, 2012 [1 favorite]


Telegraph: Libor scandal: Serious Fraud Office opens investigation - The Serious Fraud Office (SFO) has formerly opened an investigation on the Libor scandal that will probe individuals and banks for evidence of criminal actitivity.

Independent: Exclusive: Barclays insider lifts lid on bank's toxic culture

The Guardian: Bob Diamond, Barclays, MPs and Libor: five more points

FT Alphaville has a link roundup: ‘The Libor matter,’ at the SFO
posted by the man of twists and turns at 12:51 PM on July 7, 2012


naked capitalism: Former Senior Barclays Staffer Charges Diamond with Lying to MPs in Select Committee Testimony
posted by the man of twists and turns at 12:55 PM on July 7, 2012


City Journal: Libor Pangs:Another week, another reminder that the banks are still busted
posted by the man of twists and turns at 2:18 PM on July 7, 2012


I can't even imagine what "duuuude" sounds like in an English accent.

I've noticed English people sometimes to say "stupid" like "stewpid," so I guess it would be pronounced like "deud."
posted by JHarris at 8:06 PM on July 7, 2012


NYTimes: The British, at Least, Are Getting Tough
One of the most revealing exchanges in the Barclays documents came when a bank official tried to describe why Barclays’s improper postings were not as problematic as those of other banks. “We’re clean but we’re dirty-clean, rather than clean-clean,” an executive said in a phone conversation. Talk about defining deviancy down.

“Dirty clean” versus “clean clean” pretty much sums up Wall Street’s view of cheating. If everybody does it, nobody should be held accountable if caught. Alas, many United States regulators and prosecutors seem to have bought into this argument.
The Telegraph: Bank forecasts futile now all trust has gone, says analyst: Banks have blown so much trust that there is no point crunching the numbers on them, a leading City analyst has declared in the wake of the Barclays Libor scandal.

The Telegraph: Barclays urge Bob Diamond not to take full £17million payoff: Barclays’ bosses are to put pressure on Bob Diamond, the bank’s chief executive who last week stepped down over the Libor rate-fixing scandal, not to accept his full pay-off worth up to £17 million.

The Telegraph, editorial: A grotesque clash of politics and banking. What should be a sober business process – the ending of a CEO’s tenure – has turned into a piece of political theatre.

The Independent: Heat turned up on global Libor probes: German regulators intensify rate-fixing investigation into Deutsche Bank

American banker: In Libor Scandal, Prosecutors Need to Think Criminal:
Justice will be far better served — and examples made — if prosecutors take an aggressive and creative look at whether they should try to put behind bars those responsible for manipulating what the world pays for credit and those above them who looked the other way.
The Economist, January of 2012. Compare with this week's cover.

Really, just go read Naked Capitalism.
posted by the man of twists and turns at 7:37 AM on July 8, 2012 [2 favorites]


If you read nothing else, read this: The Libor warnings the Bank was told to heed

It makes the very good point that in October 2008 two bank (Royal Bank of Scotland and HBOS) were submitting their LIBOR figures despite the fact that they were then on Emergency Lending Assistance from the Bank of England. In other words, they had no ability to borrow any money, but they were still submitting fantasy figures that allegedly represented the rates at which they might have borrowed money if they were in a position to do so. The rates they submitted were actually lower than the ones being submitted by Barclays, a bank that was still liquid! So the Bank of England necessarily knew that Libor was being manipulated two weeks before the phone call in which Barclays was allegedly told to submit a lower rate.

The question as to whether Barclays was told to submit a lower Libor rate is still open, but one has to ask whether the Bank of England itself was setting the Libor submissions made by the banks receiving Emergency Lending Assistance, given that they were presumably acting under its instructions.
posted by Joe in Australia at 9:16 AM on July 8, 2012


CSMonitor - Scandal of scandals: Barclays corruption probe digs up new dirt
There are really two different Libor scandals. One has to do with a period just before the financial crisis, around 2007, when Barclays and other banks submitted fake Libor rates lower than the banks’ actual borrowing costs in order to disguise how much trouble they were in. This was bad enough. Had the world known then, action might have been taken earlier to diminish the impact of the near financial meltdown of 2008.

But the other scandal is even worse. It involves a more general practice, starting around 2005 and continuing until – who knows? it might still be going on — to rig the Libor in whatever way necessary to assure the banks’ bets on derivatives would be profitable.
posted by the man of twists and turns at 12:36 PM on July 9, 2012 [3 favorites]


Yahoo Finance UK: The Biggest Banking Scam Ever
Due to the vast scale of this illegal activity, Libor lawsuits, fines and damages could be an existential threat to Barclays and other banks. Shareholders should forget about the damage to banks' reputations, which are already in the gutter. Instead, they should worry about the very future of the banks involved.
posted by the man of twists and turns at 6:01 PM on July 9, 2012 [1 favorite]


NYTimes: The British, at Least, Are Getting Tough

New York Times, Gretchen Morgenson Applaud British, Issue Challenge To American Regulators Over LIBOR Scandal
posted by homunculus at 6:32 PM on July 9, 2012


Glenn Greenwald, Salon: The Rules of American Justice
The next time an American political official is tempted to torture people or spy on Americans in violation of the law or destroy court-ordered evidence of wrongdoing — or the next time Wall Street executives are tempted to commit institutional fraud for personal enrichment — what incentives does anyone think will exist for them to refrain?
The New Republic: How Megabanks Corrupt Regulators: LIBOR edition
Basically, Barclays is saying that the Bank of England all-but explicitly advised it to lower its interest-rate reports to LIBOR, because otherwise people would get the impression that the bank was in lousy health, and that might create problems (via some kind of run). According to the Journal, Barclays went along with this partly because it felt that a lot of unhealthy banks were already submitting implausibly low reports, so it would be foolish to hold out.
Common Dreams: Following Barclays' Scandal, Stiglitz says 'Send Bankers to Jail': Without threat of prosecution, says Nobel economist, expect little to change.
posted by the man of twists and turns at 7:25 PM on July 9, 2012 [1 favorite]


Al Jazeera: Former Barlcays boss forgoes $30m bonus: Former Barclays chief Bob Diamond will still collect $3m after the bank was fined $450m for rate fixing
posted by the man of twists and turns at 8:13 AM on July 10, 2012


London Banker: Lies, Damn Lies, and LIBOR
We have allowed markets to evolve in ways that make supervision of markets almost impossible. Many instruments trade off-exchange or in multiple venues, making it nearly impossible for any single investor or regulator to supervise trading to prevent or detect manipulation or abuse. Many financial instruments are now synthetic compilations of underlying assets and derivatives, with multiple pricing components determined by reference to other prices or rates. Demutualisation and regualtory reforms stripped exchanges of the self-regulating interest in preventing manipulation and abuse by their members as mergers, profits and market share came to dominate governance objectives
posted by the man of twists and turns at 9:12 AM on July 10, 2012


Hell, even the Washington Post is getting in on the action: Time for ‘Banksters’ to be prosecuted:
The stakes are staggering. The Libor should be as good as gold. It pegs the value of up to $800 trillion in financial instruments. The collusion was systematic and routine. Investigations are underway not only in the United Kingdom but also in the United States, Canada and the European Union. Those named in the probes are all the usual suspects: JPMorgan Chase, Citibank, UBS, Deutsche Bank, HSBC, UBS and others. This wasn’t rogue trading, as the Economist concludes; it was more like a cartel.
posted by the man of twists and turns at 2:41 PM on July 10, 2012 [1 favorite]


The LIBOR Scandal Explained [Infographic]
posted by homunculus at 8:27 PM on July 10, 2012


Why is Nobody Freaking Out About the LIBOR Banking Scandal?

Because we know our politicians are not going to do anything anyway.

It is one thinig to freak out when you live in a society capable of change - but to freak out about the banks now in Western society is to simply bang your head against the wall.

Notions of Democracy and Capitalism laugh at you - laugh at all of us. We live in an Oligarchy, controlled by corporate over-lords - and in a Command Economy, controlled by those Oligarchs.

I agree, let's replace capitalism.

How could you be so niave to think Capitalism still exists?
What we need to do is GET BACK TO CAPITALISM.
posted by Flood at 4:47 AM on July 11, 2012


Barclay's: For the Best Fixed Rates

...

LIBOR Was A Criminal Conspiracy From The Start

posted by mrgrimm at 8:19 AM on July 11, 2012


Why is Nobody Freaking Out About the LIBOR Banking Scandal?

At what point do you declare full freakout mode? These things take a little time to build.
posted by mrgrimm at 8:21 AM on July 11, 2012


Barclays chief Bob Diamond could be brought before Congress, sources say: Washington politicians considering asking former Barclays chief executive to testify as Libor-fixing controversy crosses to US

If he saw the Dimon hearing, he knows he doesn't have much to worry about.
posted by homunculus at 9:22 PM on July 11, 2012


Jamie Dimon: Buck Stops Somewhere Below Me -- JPMorgan Clawbacks Aimed at Lesser Souls
posted by homunculus at 12:19 PM on July 12, 2012


From The Economist:

The fog of LIBOR:LIBOR is badly broken. But for now, a flawed number is better than none


Buttonwood: The golden rules of banking: They make the rules, and get the gold.
posted by the man of twists and turns at 4:04 PM on July 12, 2012


'No one snowflake is responsible to the avalanche.'

Baltimore takes lead in suit against banks over alleged Libor manipulation
posted by the man of twists and turns at 5:52 PM on July 12, 2012


Naked Capitalism attempts to crunch the numbers for the rate manipulation:

So How Much Did the Banksters Make on Libor-Related Ill-Gotten Gains?

Long story short, ~$3 million per person in bonuses over four years, for traders 'in the know.'
posted by the man of twists and turns at 8:00 PM on July 12, 2012


Timothy Geithner and Mervyn King discussed Libor worries in 2008: Bank of England releases memo from senior US official calling on governor to improve integrity of Libor setting
posted by homunculus at 1:54 PM on July 13, 2012 [1 favorite]


Naked Capitalism: Will the Libor Scandal Lead to Prosecutions? Some Hidden History and Current Prospects (videos)
posted by the man of twists and turns at 2:30 PM on July 14, 2012


U.S. Is Building Criminal Cases in Rate-Fixing
posted by homunculus at 10:20 PM on July 14, 2012


« Older "I recently came across this video: Mathematically...  |  Signs of cooperation between C... Newer »


This thread has been archived and is closed to new comments